Store credit cards - The good and the bad

Find out the advantages and disadvantages of store cards, and which store card credit card might be best for you.

What is a store card?

A store card is a credit card issued by a retailer. They're branded with the same logo as the shop or online retailer, and usually offer in-store discounts and loyalty points. These can be exchanged for special offers or money off purchases.

What is the difference between a store card and a credit card?

Traditionally you could only use your store card as a credit card with the retailer that issued the card, but now most store cards can be used anywhere and many have competitive rates and 0% interest offers.

However, the flexibility of a store card depends very much on the retailer that issues it. Some store cards may be used like a normal credit card, with the incentive that you earn loyalty points available if you spend in store.

How do I get a store card?

When you come to pay at a retailer, you may be offered the opportunity to sign up to their store card. If you do sign up, you can cancel the card within 14 days if you change your mind.

What are the advantages of a store card?

If you shop regularly in a specific store, you might benefit from vouchers, loyalty points or discounts by spending via your store card. Some retailers may provide free delivery for online purchases if you're a cardholder.

What are the disadvantages of a store card?

Sometimes the interest rate and charges for having a store card can be higher than an ordinary credit card. For example, the APR on a store card can be 30% or more, whereas a traditional credit card might be 18%. This isn't a problem if you're always able to clear your balance in full each month. 

However, if you forget or you don't make the minimum payment, it could end up being very expensive and cancel out the benefits you could get from the discounts and special offers.

If you're careful about how you use your store card, then it could be a useful way to earn back some of the money you have spent.

What is the difference between a store card and reward card?

A reward card gives you rewards and perks in return for general shopping, rather than in one particular store. So if you aren’t a loyal shopper and tend to use your card in a variety of places, then this might be a better option for you.

Also, don’t get store cards mixed up with credit cards issued by some big supermarkets. These enable you to collect points when you shop, but you can use them like a normal card for general shopping too.

Should I sign up to a store card?

Store cards can be a useful card to have in your purse or wallet if you find yourself spending regularly in the same store. You do need to be in control of your money and be careful not to overspend. Here are some benefits and advantages of a store card credit card: 

Discount Offers

You will usually get discount offers when you sign up for the card. This might include 25% off your first purchase, or double reward points for the first year.

Make sure to keep an eye on the balance on the card, and the interest you will be charged.

Remember to pay your bill in full at the end of the month, or you will find the interest charges making the card not worth the discounts.

Also, think about whether you will really use the discounts. For example, if you're offered a 20% discount on your first purchase, wait to use the card until you need to buy something expensive, 20% off a £500 TV is £100, as opposed to £1 knocked off of a £5 pair of socks.

Membership perks

Some store cards allow you access to exclusive shopping events, similar to a membership club. You can attend these events and take advantage of the deals they offer, such as early access to sales.

You also get other benefits, depending on the store card. For instance, you could enjoy:

• Free shipping from their online stores

• Earn points and reward vouchers via attached loyalty schemes

• Return merchandise without any questions

• Discounts in their cafés and restaurants

Are there any other disadvantages of store credit cards?

While there are certainly downsides to store cards, as long as you keep your spending at a level where you can pay your bill off at the end of the month, there's no reason you shouldn't apply for one.

Be careful about your spending – it's easy to give in to temptation and rack up a bill that could take years to pay off.

Lower credit limit

Some store cards have a lower credit limit than traditional credit cards. At first this might seem like a disadvantage, but it's actually a benefit. If you have a lower credit limit, you won’t be able to spend as much as you would with a standard card. This could be an advantage to a store credit card if you're trying to keep your spending under control.

You could use your standard card to pay for your purchases, but you probably don't want to, because then you'd miss out on all the discounts.

High interest rates

Many store cards traditionally charged high interest rates, often around 25%, while some go up to nearly 30%. This is a lot more than a typical mainstream credit card with an APR of between 6% and 20%.

So if you're in the habit of spending more than you can repay its worth considering carefully before getting one of these cards.

The one-retailer limitation

Most store cards only offer discounts and rewards with one retailer, and some might only allow you to shop with them (though this is less common these days). This might not be a disadvantage to your store credit card if you shop at that store frequently, but it might become a problem if you don't.

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